Cards-N-Time: Department Stores II, Wanamaker’s

Thursday

Dec 5, 2013 at 9:09 PM

Historically, department stores depended on multitudes of shoppers walking through their stores in turn depended on jobs, population, housing downtown in major cities. This required that downtowns be transportation hubs for non-resident shoppers.

By Bob Allison

Historically, department stores depended on multitudes of shoppers walking through their stores in turn depended on jobs, population, housing downtown in major cities. This required that downtowns be transportation hubs for non-resident shoppers. The first settlements were seaside because water was the easiest form of transportation. By the 18th century, settlers had moved inland on navigable rivers. Beginning with the Erie in 1832, canals and the Great Lakes took settlers from Albany to Chicago. Between the Civil War and the closing of the frontier in 1890, rails had extended across the country, taking settlers from the Mississippi to the west coast.

The automobile age exploded about 1913 and continued throughout the 20th century, stitching the nation into a national market. Beginning in the ’20s, airlines connected national with international markets. Mass markets made mass production possible, which initially made mass merchandising possible and subsequently made it mandatory. Beginning in the ’60s, interstate highways flushed jobs and people out of inner cities and into suburbs where shopping initially followed and subsequently preceded and attracted them to the suburbs.

Wal-Mart boomed in the ’70s, taking the enormous price-conscious segment of the shoppers. The combined effects of these tectonic shifts in the marketing landscape so enervated downtown department stores by 2005 that most had been driven to sell or cease operations.

Young people have recently begun moving back downtown, but it isn’t bringing a revival of the giant department store. Instead of shoppers coming to stores now, stores are coming to shoppers through internet sales e.g., e-commerce. Total sales this Thanksgiving weekend were down slightly while e-commerce revenue was up 40 percent from 2012. Cyber Monday, 131 million shopped online, leading analysts to conclude that we are witnessing a new normal in retailing of prominent and permanent use of aps in retailing.

Philadelphia

Wanamaker’s flagship store in downtown Philadelphia provides a good case history of these trends in department stores. In the nation’s first census of 1790, Philadelphia’s was the second largest city at 28,522 residents—similar to Shawnee the last half century. They grew 10,000 a year the following 160 years until peaking in the 1950s above two million.

Philadelphia pioneered downtown department stores because they possessed all the necessary characteristics for their development in colonial times—especially densely-packed neighborhoods. The coming of interstate highways in the ’60s threatened low-income neighborhoods because “slum land could be snapped up for a song.”* Citizens organized and blocked destruction of inner-city, low-income neighborhoods. The I-676 crosstown expressway seven blocks north of and parallel to Market Street was eventually built as an elevated, eight-lane highway. Partly as a result, the city lost 10,000 residents a year the next 50 years. Those rescued neighborhoods are now being gentrified as part of the city’s renaissance. (In contrast, Oklahoma City allowed I-40 and planner I.M. Pei’s bulldozer’s to clear 600 acres of downtown Oklahoma City—removing most residents and businesses.)

Market East

Two blocks north from Independence Hall, 6th Street intersects Market Street. Two blocks west at 8th and Market Street are Strawbridge and Clothier’s and Gimbel’s department stores. The next six blocks, ending at 13th Street with Wanamaker’s is known as Center City and is the birthplace of America’s department stores.

Wanamaker’s

John Wanamaker (1838-1922), scion of a wealthy south Philadelphia family, opened his first dry goods store there in 1861 where the Liberty Bell is now on display at 6th and Market. In 1875, he bought the abandoned Pennsylvania RR depot six blocks west and across the street from City Hall. It was palatial in style and scale, earning it the name “The Grand Depot,” and setting a benchmark for flagship department stores in downtowns everywhere. It is considered the first department store in America and attracted five other similar stores down the street. It was succeeded by a new store on the same site in 1910, which still stands.

Wanamaker was an innovator in many aspects of retailing. He was honest, set fixed prices, gave money-back guarantees, and ran the first half and full-page ads created by the first full-time copy writer. He was a paternalistic employer whose practices were a half-century ahead of American business.

The Rest of the Story

Changing demographics and competition gradually drove Wanamaker’s to sell to Carter, Hawley, and Hale (CHH) in 1978, for them to sell to Woodward and Lathrop (W&L) in 1986, for them to sell to May’s in 1995, and for them to sell to Macy’s in 2006. (As Associate to the Director of the University of Michigan Hospital in 1980, I worked with Alfred Taubman, owner of W&L, and in December 1981 interviewed Edward W. Carter. Carter retired in 1983 before CHH went bankrupt. Al went on to buy world famous auction house Christy’s of London, conspire to fix prices with principal competitor Sotheby’s, and consequently go to prison. I went on to international obscurity.]